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The SEC has not crushed VanEck’s hopes of expanding indirect exposure to the crypto industry. Following a failed attempt at a spot Bitcoin ETF, the fund manager has filed for a fund linking to digital asset mining companies. The ETF will be 80% invested in securities from crypto mining businesses.
Exposure To The Mining Industry
According to VanEck’s application with the SEC yesterday, the mining companies included must generate at least 50% of their revenues from mining activity. Furthermore, the ETF’s holdings may consist of small and medium-cap companies, foreign emerging market issuers, and securities denominated in foreign currencies.
Fees for users of the fund may include management fees, operating expenses, brokerage fees, and other expenses related to the fiscal year. No details on its listing date or ticker symbol have been provided.
Notably, the fund will not invest directly in cryptocurrencies nor indirectly through derivatives. It will also avoid investments in ICOs, therefore not tracking the performance of any digital asset.
“The Fund may, however, have indirect exposure to digital assets by virtue of its investments in Digital Asset Mining Companies that use one or more digital assets as part of their business activities or that hold digital assets as proprietary investments,” reads the application.
Last month, the SEC rejected VanEck’s attempt at a Bitcoin Spot ETF. The filing came out in March. However, it went through several months of delay before the commission dismissed it over investor protection concerns. The SEC had a habit of postponing Bitcoin ETFs until October, when the ProShares Bitcoin strategy ETF went live.
The ProShares ETF was futures-based. And, Gary Gensler has shown greater openness to it due to its protections under the CME. However, the commission has approved multiple related ETFs since. In November, one of these came from VanEck but garnered far less traction on opening day than the ProShares ETF.
Alternatives to Bitcoin ETFs
VanEck’s ETF proposal provides a clever workaround to the SEC’s caution regarding spot crypto ETFs. The profit of mining companies relies on Bitcoin’s price to some extent, providing an indirect form of asset exposure.
Once or twice removed from actual Bitcoin holdings, similar investment products have seen success in the US. For example, Volt’s equity ETF launched in early October, which tracks distinct companies that hold most of their net assets in Bitcoin. The actively managed fund is eyeing Microstrategy, with over 120 000 Bitcoin.